The right way for SMEs to make calls

Voice communications are vital for modern small businesses. The market has grown massively over the past 10 years and the choice of service providers, technologies and networks is often bewildering. Stewart Baines offers some advice to buyers on the best way to identify and procure the right telecoms services.

While the very smallest businesses only need to buy a couple of lines and mobile price plans directly from their service providers, any company with more than five employees is probably using a PBX or key system.

If a business has a traditional phone system there is a strong chance they are reluctant to upgrade. The initial upfront cost of a new telephone switch is enough to put most off upgrading until the last possible moment.

When the time comes for a small and medium-sized business (SME) to choose telecoms services, here are some options to consider.

Leasing phone systems

Amortized over a half a dozen years, phone systems are cost-effective and hardy instruments. They're not as buggy as a PC and require very little care but the upfront costs can be considerable. As more functionality is incorporated, such as integration with messaging servers, complexity also increases. So for some businesses, the alternative to ownership is some sort of leased or managed service. Neither is new but both are on an upward curve.

According to Alcatel's business development manager for small business, Trevor Evans, the most significant shift we will see in business telephony systems in the coming years is the inclination to rent.

"Leasing has not been common in telecoms. Small businesses will routinely lease copiers and PCs but it's not translated well to phone systems. People have tended to buy them outright, less than 20 per cent will lease. We think with the right training, telephone systems resellers will be able to offer leasing as an option and many more people will take it up."

Leasing of hardware could also be bundled with maintenance, support and even connectivity.

Telcos have struggled to support the SME segment successfully, so Evans believes that resellers will step up a grade to offer fully managed services where customers are charged a per-user, per-month fee for all of their voice and data. Businesses that do adopt this approach will need to trade off the three-year contract lock-in against the lower overheads and management headache.

Hosted services

Renting a phone system is not the only way to slash upfront costs. Hosted services allow small companies to completely dispense with managing the equipment as well. Telcos have been offering hosted voice services for years. Centrex has long been promised as the paracetamol to small businesses but a reputation for inflexibility has inhibited growth. BT's Featureline Centrex service remains popular with many micro-businesses that are reluctant to buy their own switch.

In hosted services, all of the call control is managed in the network, allowing small-time users to benefit from hunt groups, call diversion, voice mail, short codes, picking up from another extension and about a hundred other functions.

This option appeals when you want to appear bigger than you actually are. But don't expect to make simple moves, adds and changes. If you need a new line for an additional employee it can take weeks to provision. Increasingly IP is making inroads into the Centrex world, and with it comes more customer self-control - which is a good thing.

IP-PBX

For small businesses looking to move to the new generation of telecom services, an IP-PBX or voice over IP (VoIP) gateway has all the capabilities of a traditional switch or key system. It offers 'five nines' (99.999 per cent) reliability but in a modern package that allows administrators to manage their own moves, adds and changes as well as converge voice and data onto the same network. It's the equivalent to the jump from VHS to DVD.

VoIP functionality is built into most modern digital phone systems, so by default, IP telephony capability is making its way into British businesses. But few are choosing to use it. Alcatel, one of the leading switch manufacturers, estimates that 50 per cent of larger enterprises buying hybrid IP-PBXs will be using the IP capabilities but just 12 per cent of small businesses buying new phone systems will use the IP telephony functionality.

Another survey, this one by BT during 2005, found that a third of businesses with between 20 and 100 employees had never even heard of convergence.

The reasons for slow uptake of IP telephony are understandable - most small businesses don't have a LAN capable of supporting voice and data, while IP handsets are considerably more expensive than standard ones. Operators are actively promoting convergence but for some traditional businesses, the message is clearly not getting through.

Voice over DSL

Broadband is also promising to overturn the age-old reliance on traditional telephone systems, both in terms of ongoing costs as well as upfront payments.

Following in the footsteps of BT, telecoms vendor THUS is targeting freelancers, homeworkers and very small businesses with its Demon Voice over Broadband service. This will essentially provide three business-grade voice lines alongside internet access over a single DSL connection. There will be no extra line rental for the VoIP lines so this could instantly lop £30 off the monthly bill.

"Customers will be offered a choice of pay-as-you-go tariffing or monthly flat rate pricing," explains Dan Cole, head of product portfolio at THUS. "They can either go for the extra functionality of an IP handset or with a cheap adaptor [they] can use their existing analogue handsets."

Within six to nine months, THUS hopes to launch a version for slightly larger organisations. The service will feature a DSL gateway supporting up to 30 simultaneous calls, all running over a single DSL connection. The DSL line will need to have very little contention and consequently more expensive than residential broadband but THUS believes costs will still be 30 to 40 per cent less than comparable ISDN30 lines.

Like Centrex, the majority of the call control will be in the network so the customer premises equipment will be less than a tenth of the price of a comparable 30 port IP-PBX and will support analogue as well as IP handsets.

Skype et al

The internet provides another option for phone services. An application like Skype can be a useful addition to a fixed or mobile phone, particularly for those that make a lot of international calls.

Skype, like similar applications from AOL, Google and Microsoft, is free VoIP software that requires only a headset or handset that can plug into a PC. By using an existing broadband line, Skype users can then talk for free providing the person they are calling is also using Skype. According to Skype, which is now owned by eBay, more than 30 per cent of their 75 million users are small businesses.

This sort of application is particularly useful for those who make a lot of overseas calls to business partners. If users need to call ordinary telephones, both domestically or internally, the SkypeOut option provides this at local rates. Unfortunately, quality is not guaranteed hence most users will not rely on Skype as their sole means of communication.

Mobile

The rising use of mobile phones appears to be unavoidable. Business users are some of the worse culprits of unnecessary fixed-mobile substitution. How often have you seen someone make a call on their work mobile when a perfectly good desk phone sits in front of them?

When fixed phones are sitting on the desk and are not being used, small-business managers will begin to question whether upgrading a fixed telephone system offers value for money. Recognising this, many are now cracking down on unnecessary mobile calls, encouraging those at their desk to use the fixed blower.

Mobile operators, however, have a range of discount plans to encourage further mobile use. Vodafone, for example, offers a variety of call plans that discount calls from fixed extensions to mobile, from mobile back into the office and between mobiles. But all are separate plans and can be confusing to a business manager hoping to optimise their communications usage.

For small businesses without an existing fixed telephony system, going mobile only can be a real option of 'value for money' is more important than 'the cheapest deal'.